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PUBLIC OWNERSHIP 

THROUGHOUT THE WORLD 

A Survey of the Extent of Government 
Control and Operation. 


By 

HARRY W. LAIDLER, PH. D. 


PUBLISHED BY 

The Rand School of Social Science 

NEW YORK 

1918 








American LaborYear Book 

1917-18 

A volume of 384 pages of written and tabular matter 
indispensable to every student of the Socialist and Labor 
movements 

Edited by 

ALEXANDER TRACHTENBERG 

Director, Department of Labor Research 
Rand School of Social Science 

A comprehensive survey of the progress of the Socialist 
and Labor movements in the United States and abroad 
and a compilation of facts concerning political, social and 
economic conditions. 

Among the contributors are the following: 

Professor Scott Nearing* Florence Kelley, Morris Hill- 
quit, William Green, Secretary, United Mine Workers’ 
of America, Mayor D. Hoan of Milwaukee, Profes¬ 
sor George G. Groat, W. S. Carter, President, Brother¬ 
hood Locomotive Firemen and Enginemen, Basil M. 
Manly, Ph. Snowden, M.P., Dr. I. M. Rubinow, Dr. 
Helen L. Sumner, Fred Hewitt, Int. Machinists’ Union, 
Prof. W. F. Ogbum, Dr. G. M. Price. 

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PUBLIC OWNERSHIP 

THROUGHOUT THE WORLD 


A Survey of the Extent of Government 
Control and Operation. 


By 

HARRY W. LAIDLER, PH. D. 


Published by 

The Rand School of Social Science 
7 East loth St., New York. 
1918. 



. L 


FOREWORD 


Dr. Laidler has brought together in the following pages the facts 
of public ownership throughout the world. The monograph is con¬ 
veniently divided into three parts. 


In the first part the reader will find an account of the extent of 


government control and operation of various enterprises before the 
beginning of the Great War. The record of achievement in the 
field of public ownership before August, 1914, shows how far differ¬ 
ent countries have gone in acquiring control of the production and 
distribution of goods and services. 

The war has dealt a blow to individual enterprise in the basic in¬ 
dustries. The governments of the various belligerent countries were 
forced to assume complete charge over the industries essential in 
the prosecution of the war. An account of the passing of those in¬ 
dustries from individual to public control will be found in the second 
part of the pamphlet. 

Government control and operation may not only fail to contribute 
to the building of a state based on political and industrial democracy, 
but, in fact, lead to a governmental oligarchy, fraught with greater 
dangers than private ownership and control. Dr. Laidler takes up 
briefly in the concluding part of the booklet the requirements for a 
collectivism which, in the words of a well-known definition of So¬ 
cialism, will not only provide for public ownership, but also include 
democratic management of the social means of production, distri¬ 
bution and exchange. From the point of view of social democracy 
the distinction is most important: 

The Department of Labor Research of the Rand School of Social 
Science presents this little volume as a contribution to the literature 
on Collectivism—enhanced by the war, and presenting very serious 
problems to the peoples of the world. 


ALEXANDER TRACHTENBERG. 


August, 1918. 


Copyright, 1918, 
by 

The Rand School of Social Science 
New York. 



SEP - 



I 


A SURVEY OF PUBLIC OWNERSHIP THROUGH¬ 
OUT THE WORLD. 

N THE year 1776 , the date of the Declaration of In¬ 
dependence, Adam Smith, the great English classical 
.economist, sagely announced to the world that there 
were only three lines of business in which joint stock 
companies or corporations could successfully compete 
against the small individually supervised concern. And 
for years, while the corporate form of industry was be¬ 
coming dominant in nearly every line of industrial effort, 
the brilliant economists of Europe and America were 
carefully explaining to innocent students tfhat the cor¬ 
poration could survive only in a few lines of endeavor. 

In more recent times, economists have been theoret¬ 
ically limiting the field of public operation almost as nar¬ 
rowly as did Adam Smith that of the corporation, and 
have been writing learned disquisitions to prove that pub¬ 
lic ownership was a chimerical dream except in the case 
of a few utilities. But the world outside of the class¬ 
room and study has been impudently paying little heed 
to their theories and the small corporation has been 
steadily advancing into the large corporation; in many in¬ 
stances, into the trust and combine, and, finally, into gov¬ 
ernmental or publicly owned industry . 1 

Forces Leading to Public Ownership 

This last step from private to public operation has been 
the result of many forces, some conservative, some gen¬ 
uinely democratic. Governments have urged the adoption 
of public ownership in order to raise revenue and to in¬ 
crease economic and military efficiency in peace and in war. 
Business men have fought for public ownership of certain 

1 The words, “government ownership,” “public ownership,” “collectivism” 
and “state Socialism” are here used interchangeably, although it is recognized 
that valid arguments may be brought against such use. 



4 


PUBLIC OWNERSHIP 


utilities in order that they might obtain cheaper power and 
other services, and thus be enabled to compete more effec¬ 
tively against business interests in other communities. 

The mass of the people have demanded public control in 
order to abolish the anti-social exploitation and tyranny of 
large corporations and monopolies; to promote the health 
and safety of the community; to increase educational and 
recreational opportunities; to encourage the use of certain 
^services and commodities, such as the water supply, and dis¬ 
courage the use of others, such as alcohol; to reduce the 
enormous wastes of individualistic competition; to decrease 
the high cost of living; to improve the condition of the work¬ 
ers, and to strengthen in general all those forces which are 
working for a more complete democracy and brotherhood. 

Extent of Public Ownership 

The trend toward collectivism, as a result of these many 
forces, became so pronounced even before the war, as to 
make the plight of the individualistic philosopher indeed a 
sad one. In describing his case in “individualistic” England, 
Mr. Sidney Webb, the noted English economist, a few years 
ago, humorously remarked: 

“The individualist city councillor walks along the munici¬ 
pal pavement lit by municipal gas and cleansed by municipal 
brooms with municipal water, and seeing by the municipal 
clock in the municipal market that he is too early to meet 
his children coming from the municipal school, hard by the 
county lunatic asylum and the municipal hospital, will use 
the national telegraph system to tell them not to walk 
through the municipal park, but to come by the municipal 
tramway, to meet him in the municipal reading room, by the 
municipal art gallery, museum and library, where he in¬ 
tends to consult some of the national publications in order 
to prepare his next speech in the municipal town hall in 
favor of the nationalization of canals and the increase of the 
government control over our railway system.” 1 


I Vandervelde, Collectivism, pp. 120-1. 



PUBLIC OWNERSHIP 


5 


In fact, the state, whether we like it or not, is being silent¬ 
ly transformed from a mere government of men into a huge 
industrial plant. In Europe, South America, the United 
States, Japan and their dependencies, we are told by the 
Fabian Research Bureau that, immediately prior to the war, 
the public property possessed by the various governments, 
excluding that connected with the armies and navies, did 
not amount to less than $50,000,000,000. The persons em¬ 
ployed directly in public works, numbered between 10,000,- 
000 and 12,000,000, and the wages paid out for all grades 
of public work aggregated between $2,000,000,000 and $2,- 
500,000,000 a year. 1 

“The population in Government employ to-day certainly 
exceeds,” declared the Fabian Research Department, “the 
whole existing population of the United Kingdom; their 
annual income, which we may take as some sort of valua¬ 
tion of their services or product, exceeds the entire wealth 
production to-day of all the inhabitants of any but a half 
dozen richest nations of the world; whilst the capital thus 
administered is more than double the entire wealth of the 
essentially individualist England that welcomed the world 
to the 1851 Exhibition—is as great, indeed, as Giffert's esti¬ 
mate for the entire wealth of the United Kingdom, as re¬ 
cently as 1885.” 2 

" “It is a significant fact,” runs the report, “that even omit¬ 
ting the army and navy, the state department has become, 
in the twentieth century, in every civilized nation, by far 
the largest employer of labor.” 

The extent to which this transformation in the character 
of the state is going on is strikingly brought out in an article 
published in the summer of 1914, by Lewis Harcourt, M. P., 
then Secretary of State for the Colonies, and almost the 
least socialistic of any member of the cabinet. Mr. Har¬ 
court thus described the duties of his office: 

1 Fabian Research Department on the Control of Industry, State and 
Municipal Enterprise, pp. 12-13 (Supplement to the New Statesman, May 8, 
1915.) 

2 Ibid, p. 13. 



6 


PUBLIC OWNERSHIP 


“In these days the Colonial office has more the attributes 
of an immense trading and administrative concern than 
those of earlier days when it was a mere machine of gov¬ 
ernment. My days and nights are spent in the study of 
medicine, in the, details of railway construction, with the 
desire that the smallest sum of money may lay the largest 
number of miles of tracks in the fewest possibly days. I 
am a coal and tin miner in Nigeria, a gold miner in Guiana. 
I seek timber in one colony, oil and nuts in another, cocoa 
in a third—copra and copal, seisal and hemp, cotton, coffee, 
tobacco, are common to my daily care/" 1 (Italics mine.) 

Government ownership has developed in an infinite vari¬ 
ety of businesses. This development may be roughly di¬ 
vided into the period prior to the European war, and the 
“war collectivism” precipitated by the conflagration of Aug¬ 
ust, 1914. A study of the pre-war period will indicate a 
steady advance of collective control in transportation and 
communication; in education, public health and safety, and, 
to a less extent, in mining and other industries relating to 
the development of natural resources, in banking, com¬ 
merce and manufacture. Since the outbreak of the war, 
the race toward collectivism, “state Socialism” or “state cap¬ 
italism,” as it has been variously described, has developed 
into a mad gallop. Hundreds of endeavors formerly re¬ 
garded as sacred to private enterprise have been drawn 
within the dominion of the collectivity under the stress and 
strain of war and, in many cases, this public control will 
undoubtedly prove of a permanent character. 

As the trend toward public ownership before the world, 
conflict presents a more normal development than that re¬ 
sulting therefrom, we will first turn our attention toward 
this trend. And in considering the industries under public 
control, attention should first be called to that of communi¬ 
cation and transportation. For it is significant that this, the 
greatest of all modern businesses, “is steadily and increas- 
ingly, throughout the civilized world, passing into one or 
other form of government organization.” 


1 London Tunes, July 1, 1914. 


PUBLIC OWNERSHIP 


/ 


Communication 

Mail Service —It goes without saying that the delivery 
of mail, in. every country of importance, is now in the 
hands of public post offices. Only in such obscure and back¬ 
ward countries as Abyssinia, Afghanistan and Arabia, is 
inland conveyance of letters left to private enterprise. 

Public ownership of the mail service in most countries 
is by no means of recent origin, and is of little significance, 
if recent tendencies toward public ownership are being con¬ 
sidered. The post office, however, of late years, has been 
taking unto itself many other services of great social im¬ 
portance connected with the newer methods of communica¬ 
tion, such as the transmission of telegrams and of cable 
messages, and the conduct of the telephone system. 

Telephones— So marked has been this tendency toward 
public operation in these last named services during the 
last few decades that the United States, Canada, Spain and 
Brazil now find themselves the only greater countries m 
which the telephone service still remains wholly m private 
hands. England, it may be said in passing, socialized its 
telephone system in January, 1912-. Even in Canada, many 
provinces now possess their own telephone service. 

Telegraphs —Public ownership is still more pronounced in 
the case of the telegraphs. In no country of the world of 
any note outside of the United States and Canada does the 
public have to depend wholly or in large part on private 
agencies when they desire to wire their friends, and in both 
the telephone and telegraph services, the government of the 
United States has assumed control, though not ownership. 

Cables —Moreover, nearly one-fifth of the cable mileage, 
whereby continents are bound one to the other, is at present 
under governmental control, the United Kingdom, France, 
Japan, Germany, Austria and Russia possessing cables of 
their own. 

Nor have the post offices stopped with the mere business 


8 


PUBLIC OWNERSHIP 


of communication. Many of them, curiously enough, from 
the standpoint of American individualism, have gone ac¬ 
tively into the business of delivering newspapers, of receiv¬ 
ing deposits, of issuing notes and life insurance policies, of 
granting annuities, collecting debts and acting as advertis¬ 
ing subscription agencies. 


Transportation 

The companion business to communication is that of 
transportation. .Under this general heading may be in¬ 
cluded highways and waterways, railroads and shipping. 

Highways —For centuries, even before the great network 
of public highways which bound together the Roman Em¬ 
pire, the nations of the world had built and operated their 
own highways, side by side with the innumerable private 
toll roads. Public operation was a natural result of mili¬ 
tary and industrial necessity, and the development of mod¬ 
ern life has made public ownership of important highways 
almost universal. Untold millions have been spent by gov¬ 
ernments in the construction and upkeep of these arteries 
of commerce. 

In the United States, during the last few years, more 
and more attention has been given to this great public in¬ 
dustry of building and improving highways, principally on 
account of the demonstrated savings of good roads to in¬ 
dustry and commerce. The United States government, for 
instance, has recently appropriated the sum of $75,000,000 
to be expended in the improvement of rural post roads be¬ 
tween 1917 and 1921, providing a similar sum is raised by 
local districts. And through its national research labora¬ 
tories, it has been engaged in extensive experimentation re¬ 
garding the best methods of road building. From 1891 to 
1915, inclusive, a period of 26 years, the various state gov¬ 
ernments have appropriated more than $200,000,000 for 
this purpose, besides the appropriations of municipalities 
and counties. 


PUBLIC OWNERSHIP 


9 


Waterways- —Public canals and inland water ways gen¬ 
erally are also year by year increasing in extent and in im¬ 
portance. One of the most spectacular efforts of any gov¬ 
ernment, and, according to some, the largest single under¬ 
taking of any government in any one period of peace, was 
the construction by the United States of the Panama Canal. 

In this experiment the government took practically en¬ 
tire charge of the housing and feeding of the labor force. 
Thousands of houses, built according to scientific specifica¬ 
tions, with baths and adequate air and light, lounging and 
sitting rooms, were constructed for the workers. Light, 
fuel and water were furnished free of charge. Fifteen 
hotels, and numerous mess room^and kitchens were estab¬ 
lished to feed the large force. There were commissary de¬ 
partment stores at which every conceivable article could be 
bought. Government refrigerating plants, ice-making 
plants, laundries, etc., were also organized. And “so per¬ 
fect were the arrangements,” according to Brigadier Gen¬ 
eral Sibert, “and such care and business ability were dis¬ 
played, that the cost of living on the Isthmus was materially 
less than for the same standard in the United States. The 
Commission was able to effect this result by cutting out the 
usual profits of middlemen, and the only advance that was 
made over first cost and transportation was enough to ^cover 
handling and amortization of cost of plants. For example, 
the Chief Engineer, who paid the same prices as everyone 
else, had daily on his table the very best cuts of fresh meats, 
in superb condition, at materially lower cost than he paid in 
Chicago—not five miles from the slaughtering pens—for 
the same quality.” 1 The sanitation department under Gor- 
gas was so effective that from 1906 to 1913 the number ad¬ 
mitted to the hospital for malarial trouble was reduced from 
800 out of every 1,000 to 70. 2 

At present the government owns a steamship line, the 
Panama Steamship Company, plying between Atlantic 


1 Quoted in Walling and Laidler, State Socialism—Pro and Con, p. 255; 
see also Sibert (Wm. L.) The Construction of the Panama Canal, pp. 92-10S. 

2 Walling and Laidler, Op. Cit., pp. 255-6. 



I o 


PUBLIC OWNERSHIP 


ports, that operated during the year 1915, without acci¬ 
dent, and with a net revenue of about $500,000, although 
the rates of competing lines were 40% above those of the 
government steamship company. The government; like¬ 
wise owns its railroad lines on the canal, and supplies 
steampships passing through the canal with fuel and food 
supplies, and controls the cable and radio service. 

Railroads —As the highways, on land and water, have 
been regarded for so many years past as essentially public 
in their nature, it is but natural that the railroads, the mod¬ 
ern arteries of commerce, the roads of iron and steam, 
should, from their early beginnings, have been regarded in 
somewhat the same light. So year after year, as a result 
of military, financial, industrial or social necessity, we have 
witnessed the railroads passing steadily from private to 
public ownership. In 1914, in fact, “of the total railway, 
mileage of the w r orld, just about half is Owned and worked 
entirely by government enterprise. Out of nearly 70 coun¬ 
tries, large or small, having railways at all, there are 50 in 
which Government administration prevails, either wholly 
or with small exceptions; in others the Government owns! 
the lines but does not work them, whilst in a few Govern¬ 
ment enterprise and private capital share the service. Only 
in the United Kingdom and the United States—which to¬ 
gether account, it is true, foPabout 68^ of the whole rail¬ 
way capital of the world—together with a few West Indian 
or African dependencies, is the railway system wholly in 
the hands of private capitalism. 

“The present movement is definitely towards Government 
administration. Italy, after various oscillations of policy 
due to final exigencies, has finally nationalized its entire 
railway administration. In Germany, Austria and Switzer¬ 
land the service has become wholly governmental. France 
has lately added to its Government railway administration 
the important ‘Western’ line. Even the United States has 
decided that the new line of a thousand miles in Alaska 
shall be built and operated entirely by the Federal govern- 


PUBLIC OWNERSHIP 


ii 


merit, under which the construction is now actually begun.” 1 

I remember listening to the debate in the House of Rep¬ 
resentatives when the Alaskan railroad bill came up for dis¬ 
cussion. One of the eloquent Congressmen from Alabama 
opposed the bill with the exclamation, “This is rank Social¬ 
ism ! I never learned that kind of Jeffersonian democracy 
at my mother’s knees!” To which the conservative leader 
of the Democrats in the House, Congressman Underwood, 
replied that the project was merely the logical carrying out 
of Jeffersonian principles. For had not Jefferson, in the 
beginning of the nineteenth century, favored the construc¬ 
tion of national roads? And do not the modern railroads 
occupy the same place in present day society as the old 
highways occupied in the days of young America? 

Moreover, municipal systems have shown the same tend¬ 
ency as have public roads. In 1882, the little town of 
Huddersfield, in England, was the only local body which 
owned its tramway system. By 1913, over 170 cities oper¬ 
ated their tramways and the capitalization of these lines 
was estimated at $225,000,000. In 1912, 132 such under-" 
takings were reported in Germany. Even America boasts 
of a municipal line in San Francisco and a small one in 
Seattle. New York City has also expended a couple of 
hundred millions of dollars in the construction of New 
York City subways, although these have been left to private 
management and exploitation. Omnibus lines, “trackless” 
trollies and other conveyances are also owned by the pub¬ 
lic in numerous cities throughout the world. 

Public Shipping —As public bodies have taken an ever 
greater interest in waterways, they have—though with a 
very considerable amount of timidity—gone into the busi¬ 
ness of water transportation. Even prior to the war, we 
find a number of steamship lines were owned by such gov¬ 
ernments as Australia, New Zealand and Japan, in the Far 
East, Brazil and the United States, in America, and Bel¬ 
gium, Italy, Russia, Rumania, Sweden and France, in Eu¬ 
rope. 

Our South American neighbor, the government of 


1 Fabian Research Department, Op. Cit., pp. 4-6. 



12 


PUBLIC OWNERSHIP 


Brazil, for instance, owns the Lloyd Brasileiro, the largest 
steamship company flying the Brazilian flag. The small Ru¬ 
manian government possessed, prior to the war, the bulk of 
tonnage sailing under the flag of that country. In 1903, 
the old Russian government obtained possession of the Rus¬ 
sian Danube Line, while almost since its organization in 
1878, the Russian Volunteer Fleet has been under the con¬ 
trol of one of the Russian ministries. , 

American tourists sailing between Dover, England, and 
Ostend, Belgium, went back and forth, for a generation be¬ 
fore the war, on a line of fast steamers—eleven of them— 
owned by the Belgian government, while those travelers 
who took the more southerly route to the continent from 
New Haven to Dieppe, patronized the profitable line owned 
by the government of France. Since 1910, the railroad ad¬ 
ministration in Italy has had charge of a line of a dozen 
steamers running from the mainland to the islands of the 
Mediterranean. 

The United States also entered the business of water 
transportation some years ago, as has been referred to else¬ 
where, when it became the chief owner of stock in the 
Panama Railroad Company, which keeps its line of three 
steamers busily occupied in transporting goods between 
New York and Colon. Since America's entrance into the 
war, federal control of shipping has been extensive. 

And then in many parts of the world there are numerous 
municipal ferries and ferries owned by governmental rail¬ 
roads for the transportation of trains in numerous parts of 
the world. Besides which, of course, there is the enormous 
traffic of governments in ships of war—a traffic which, if 
included in the general subject of water transportation, 
would render governments by far the largest ship builders 
of the world. 


Natural Resources 

If we consider the next great division, that relating to 
natural resources—forests, mines, petroleum and water 


PUBLIC OWNERSHIP 


13 

power—we must confess that these are still largely in the 
hands of private profiteers. 

Forests —Great strides toward public ownership and con¬ 
trol have, however, been made in certain directions, par¬ 
ticularly in the case of the nations’ forests. 

“It is probably safe to say,” declares Mr. Walling, in 
dealing with this resource, “that the larger part of the 
forests in modern civilized communities are already under 
governmental control, and it is certain that the govern¬ 
mental area is increasing in most countries.” 1 

More than 13% of the entire area of Germany and over 
one-half of the entire forest acreage of that country is now 
controlled by public bodies—and conducted with remark¬ 
able scientific precision. Worthy also of mention in this 
connection is the vast area of public forest land in India 
of no less than 240,000 square miles; the 660,000,000 acres 
of forests in Russia, and the great stretches in Sweden, 
Japan, Canada, France and other countries. 

Our own government, during the last century, has given 
away much of its bounteous heritage of timber land to great 
privafe railroads and other interests. At present it pos¬ 
sesses about one-fifth of the 550,000,000 acres of timber 
now standing, and that not the most valuable fifth. Since 
1891, however, the federal government has assiduously en¬ 
deavored to protect the 100,000,000 acres still in public 
control, as a result of which, “the forests on the public do¬ 
main,” according to the United States Forest Service, “have 
passed from a condition in which the timber was always 
in imminent danger of being destroyed to one in which it 
is everywhere protected; from a state in which, as a result 
of repeated fires, and wasteful lumbering, the annual growth 
was steadily decreasing, to one in which scientific manage¬ 
ment insures a steady increase in annual growth and a good 
supply of timber for the people dor an indefinite period.” 

Public Mines —Far less extensive in proportion to the 
total are the public holdings in mines. Nevertheless, there 


1 Walling and Laidler, Op. Cit., p. 186. 



H 


PUBLIC OWNERSHIP 


is a definite tendency toward increasing public control. This 
movement has been augmented by the evils of monopoly 
and the labor conflicts accompanying private ownership. 
Public control has been definitely established in many parts 
of Australia. New Zealand and Victoria own several 
mines. As early as 1898, the government in Western Aus¬ 
tralia provided that land grants should contain a reserva¬ 
tion of all minerals. Whenever minerals were found in the 
land where the surface rights had been alienated, the gov¬ 
ernment was empowered to reenter the land, paying the sur¬ 
face owner the value other than for the mineral contained 
therein. In Victoria, South Australia, Tasmania and New 
South Wales the leasehold system is practically supreme, 
and no private individual may assert with an eye to the 
truth that God in his infinite wisdom has bestowed upon 
him the coal properties of those territories. 

Some progress toward public ownership of mines has re¬ 
cently been observed in Europe. Holland, Sweden, and 
Austria-Hungary possess a considerable number of coal 
mines, and, during the past few years, the first named gov¬ 
ernment has been making a steady drive toward further so¬ 
cial control, while Prussia now counts among its possessions 
no less than 345 coal fields. Iron mines are also owned, in 
considerable measure, by Sweden and Prussia. Public sil¬ 
ver mines may be found in Scandinavian countries. Salt 
beds are public monopolies in an unusually large number of 
nations. These include certain South American countries— 
Venezuela, Colombia, Equador and Peru; Japan and China 
in Asia and France, Austria and Rumania in Europe. 

Oil —Another natural resource of great importance is oil. 
We in America know from sad experience the great power 
that may be wielded by those who control this important in¬ 
dustry. Our Argentine neighbors have vigorously tackled 
this problem and, by an enactment of 1913, decided that, in 
the development of all newly discovered oil fields, the gov¬ 
ernment shall henceforth hold a majority of seats on each 
board in the oil industry and share in the profits of the 
business. In little Serbia, which loomed so large in im- 


PUBLIC OWNERSHIP 


15 


portance at the outbreak of the present war, oil has long 
been a state monopoly. In the neighboring country of Aus¬ 
tria, large areas of petroliferous land, as well as oil re¬ 
fineries, are possessed by the Austrian government, while 
Germany has become the controlling partner in the recently 
formed petroleum monopoly and may, at almost any time, 
be expected to assume entire charge of the oil industry. 

/S Water Pozver —Of rapidly increasing importance in the 
industrial life of the world is the great natural resource 
known as water-power. For centuries waterfalls have fur¬ 
nished power for mills located on their sides, but it has been 
only within the last twenty-five years that water power has 
been brought into play, to any considerable extent, for the 
purpose of providing, electrical power and lighting to distant 
parts. In the beginning of this development, the public took 
little interest in the control of this important source of 
oower, and permitted special interests to harness, for their 
own aggrandizement, the great waterfalls of the. country. 
Niagara is but one of many examples. The grave danger 
of this policy, however, has already been sharply called 
to the attention of the peoples of the nations, and there is 
now a steady trend in the direction of public control. Can¬ 
ada recently decided that no purchaser of government land 
shall receive title to any water power that might be con¬ 
tained therein. That some of its provinces are going ac¬ 
tively into this line of endeavor is evidenced by the fact that 
Ontario’s Hydro-Electric Commission now supplies no less 
than 45 municipalities with electrical power. 

A survey of the water power situation in Europe shows 
Norway, Austria-Hungary and Sweden as the three coun¬ 
tries possessing, in the order named, the greatest amount of 
available water power. The two Scandinavian countries, 
with an eye to the future, have for years been reserving and 
purchasing many of the finest and most important falls of 
these rugged lands, while in Norway parliament has de¬ 
creed that all concessions and plants revert to the state with¬ 
out cost. In the sister country of Sweden, a public board 
conducts large electrical plants and is constructing further 


i6 


PUBLIC OWNERSHIP 


plants for state power stations. Over three-fourths of the 
water power available in the country is already under public 
control. The cantons in mountainous Switzerland also own 
numerous fall and water stations. In this, as in other direc¬ 
tions, Germany has tackled the problem in a systematic 
manner; has hedged private companies around with many 
restrictions and the various states are now seriously pro¬ 
posing government' monopolies of this huge industry. New 
Zealand has here again shown its progressive spirit by plac¬ 
ing under public control about 40% of the horsepower in 
use in the state. 

In this country, the majority of available horsepower is 
still in the hands of the government, although it is not being 
utilized by governmental agencies. According to Franklin 
Lane, secretary of the Interior, “the total horsepower of the 
United States has been conservatively estimated at 35,- 
000,000, of which not exceeding 7,000,000 has been de¬ 
veloped. Of the total undeveloped horsepower, 74% is in 
what are known as public land States, and 42% of the total 
is within government forest reserves.” 

Land —We may also, in a general way, include under the 
title “natural resources” land used for farming purposes. 
Although the actual ownership of agricultural land by gov¬ 
ernments, is, of course, very small when compared with the 
total, a considerable amount of public ownership, even in 
this industry, does actually exist. One of the most note¬ 
worthy instances is to be found in Ireland, where public 
authorities with their 30,000 farm tenants, possess the 
largest farm acreage in Great Britain. Most of the gov¬ 
ernments of Europe, furthermore, are large land owners. 

France, Germany, Italy, Austria, Russia, New Zealand 
and Australia have gone extensively into the business of 
horse breeding. The U. S. Department of Agriculture has 
also extended assistance in the care and feeding of all 
classes of live stock and scores of vineyards, nursery gar¬ 
dens and sewage farms are worked by the public. The 
government provides as well a very considerable aid to 


PUBLIC OWNERSHIP ly 

the development of agricultural science and to agricultural 
industry. 

Land Improvement —If we take a survey of public ac¬ 
tivities in connection with the improvement of land, we 
will find that this particular industry is a most extensive 
one. In this, strange as it may seem, the United States 
government is in the vanguard, spending as it does many 
millions each year in its Federal Land Recla:' ation De¬ 
partment in draining the swamps, clearing the under¬ 
growth, constructing canals, fertilizing sandy wastes and re¬ 
claiming the land from the sea. By June, 1916, the United 
States had invested over $100,000,000 in 35 irrigation pro¬ 
jects alone. 

Another country where great irrigation schemes have * 
recently been operated under governmental direction is 
far away India. In the last third of the nineteenth cen¬ 
tury, the government there expended no less than $337.- 
850,000 for this purpose, bringing under cultivation more 
than 30,000,000 acres of land. As a result of this activity, 
in Bombay and the Northern Provinces nearly double the 
population is now sustained than was supported prior to 
the introduction of modern irrigation works. 

In still another of the countries under British control, 
Egypt, there have been extremely important developments. 
The Assouan Dam, the most noteworthy irrigation works 
in that land, has given fertility to between four and five 
million acres. In Europe, France has devoted very con¬ 
siderable attention to this subject, while the small countries 
of Holland and Belgium in Eastern Europe have been en¬ 
gaged for centuries in literally creating the low portion of 
their domains. 


Commerce and Industry. 

Banking —There is one line of endeavor which has long 
been regarded as peculiarly sacred to private enterprise— 
that of banking. And yet this industry has been develop¬ 
ing public features with remarkable rapidity. In fact, if 


j8 


PUBLIC OWNERSHIP 


one considers the enormous annual turnover of the Post 
Office Savings Banks, he is forced to give the postmaster 
general of each of the leading countries the place of honor 
as the largest banker of his respective community. We 
find in many of the European countries public savings 
banks, central banks and agricultural banks. 

Many governments are not only assuming an ever greater 
control over the issuance of notes—a function which they 
have performed to a greater or lesser extent for many 
years—but we are also going extensively into the ordinary 
activities of the private banking concerns. The Prussian 
State Bank has existed since 1772; the Russian Imperial 
Bank is equally a government department; several Swiss 
Cantons have their State Banks, whilst the bank of the Aus¬ 
tralian Commonwealth Government is entering frankly into 
competition, not only with the banks of the Australian States, 
but also with the joint-stock banks in London. Many of 
the banks lend millions of dollars to cultivators and pur¬ 
chase and sell securities for customers, etc. 

Insurance —The business of insurance is now undertaken 
as well by many governments. “Every European country 
west of Poland and north of the Pyrenees has its Govern¬ 
ment Insurance system. Already the largest two investors 
in the United Kingdom are the Insurance Commission and 
the Public trustee. The New Zealand government does 
half as much as all the capitalist insurance companies put 
together. Italy and Uruguay have established legal monop¬ 
olies in this field. 

Trade and Manufacture—But the movement toward pub¬ 
lic ownership has not stopped at communication and trans¬ 
portation, at the development of natural resources, or even 
21 the ultra-capitalistic ventures of banking and insurance. 
It has been steadily advancing even into the realm of com¬ 
merce and manufacture. 

This advance has been partly for the purpose of filling 
general public needs and partly in order to supply with cer- 
tsrM essentials already existing public industries. Following 


PUBLIC OWNERSHIP 


19 


the establishment of the public tramway system in Glasgow, 
for instance, many citizens asked why, if the city eliminated 
profit in the actual running of its tramways, it should not 
seek likewise to save money for the city in the building and 
repairing of its cars, the erection of its carsheds, and the 
generation of its own electricity. The demand for that 
course of procedure finally became so insistent that the 
municipality found itself conducting these very industries 
and when I visited Glasgow in the summer of 1914, I 
found the public working at these tasks with much devo¬ 
tion and efficiency. 

In citing the numerous industries run by various govern¬ 
ments as subsidiaries to public concerns as well as those of! 
a more general character, the Fabian Research Department 
gives this interesting list: 

‘‘We have, on a larger or smaller scale, Government 
mines and quarries and brickworks; Government iron 
and steel and tin and copper works; Government tan¬ 
neries and saw mills and leather and wood works; Gov¬ 
ernment flour mills and bakeries, and slaughter houses 
and distilleries and breweries; Government clothing 
factories and saddlery and bootmaking establishments; 
Government furniture factories and scientific instrument 
workshops, and the manufacture, in one place or an¬ 
other, of every conceivable commodity, directly under 
the control, and for the use of the consumer himself.” 1 

Throughout Europe colossal governmental factories will 
be found for the preparation of such public monopolies as 
tobacco, cigars, matches, gunpowder, alcoholic drinks, pot¬ 
ash, salt, mineral waters, carpets and engravings. “The ex¬ 
quisite tapestries and furniture from the Government Gob¬ 
elins factories in France and the superb porcelain from the 
Government works at Servia, and prints from the State 
printing office, easily carry the palm for beauty.” 

Huge public printing establishments may be found in the 


1 Fabian Research Department, Op. Cit., p. 11. 



120 


PUBLIC OWNERSHIP 


United States, Japan and India, public iron and steel works 
in Japan and works for the making of agricultural imple¬ 
ments in Hungary. France, we are told, is the most ex¬ 
tensive shop keeper in the world, having, apart from all of 
her post offices, no fewer than 47,500 governmental shops 
for the sale of tobacco, matches, etc. Restaurants, hotels, 
meat and fish markets, cold storage plants, grain elevators, 
warehouses, bakeries and drug stores, lodging houses are 
also frequently conducted by municipalities and Federal 
governments. 

We are told that the recently established public drug en¬ 
terprise in France, with its fifty-five tons a day, has proved 
an immense success, saving annually to the government be¬ 
tween two and three million dollars. 

Public Ownership and the Individual %[ 

The public ownership of the foregoing industries bears a 
very definite relation to the welfare of millions of people in 
the world. The vast businesses of communication and trans¬ 
portation, of natural resources, of banking and insurance, of 
commerce and manufacturing now controlled by the state 
are intimately related to the economic life of the people. 

There is another field of government activity, however, 
which very directly affects the development of the body and 
mind of the individual citizen. These come under the gen¬ 
eral heading of educational, health and housing activities. In 
many of these lines public control has been plunging ahead 
at a remarkably rapid rate. f 

Education -—It is in the field of education that the govern¬ 
ment has been making the greatest strides in the last few 
years as compared with private ownership. Concerning this 
development, the Fabian Research Department presents this 
striking passage: 

“Nearly the whole industry (of education) has, with¬ 
in a century, passed from being, for the most part, a 
profit-making venture of individual capitalist school- 


PUBLIC OWNERSHIP 


21' 


masters, into a service almost entirely conducted not for 
profit but for use. . . . The development of the en¬ 
terprise as a Government service has, during the past: 
thirty years/alike in initiative and inventiveness, in 
diversity and adaptiveness to indivdual needs, surpassed 
all past experience and all possible expectation.” 1 

When we enter the department of recreation, we note also 
that governmental activity has'advanced at an astounding 
rate. Parks, zoological gardens, gymnasiums, golf links, li¬ 
braries, art galleries, reading and lecture rooms, theaters, 
opera houses, dance halls, tourists' bureaus and watering 
places, are but a few of the recreational and educational 
agencies now operated by municipalities and national gov¬ 
ernments. 

Governments have become quite the largest producers of 
books and other educational matter. The United States 
again is one-of the leaders in this industry. It's printing 
office in Washington is probably the largest in the world. It 
issues over a thousand different publications; is the pro¬ 
prietor of two dailies—one the Congressional Record^—five 
weeklies and seven monthlies and has a yearly output of 
nearly 4,000,000,000 printed pages. To stimulate scientific 
research and publication, it employs thousands of scientists 
tlie year round, to make investigations in agriculture, geol¬ 
ogy, mining, electricity, chemistry and innumerable other 
branches. 

Public Health Activities —Not only has the public un¬ 
dertaken the job of developing the minds of the children of 
the nation through its public school system, etc., but it has 
also dealt, to an ever greater extent, with the health of the 
people, young and old. One of the big driving forces back 
of the public ownership of the water supply was the desire 
to safeguard public health. We are told that there are now 
no less than 10,000 public water stations in the world, with 
a capital of $5,000,000,000. I11 the beginning of this re¬ 

public, out of the 16 water stations reported in the larger 

1 Ibid., p. 7. 


PUBLIC OWNERSHIP 


22 

pities, only one was public. In 1915, more than 80% of 
American cities with a population of 30,000 and over pos¬ 
sessed their own water works. The draining of the city and 
removal of refuse, so intimately connected with the pre¬ 
vention of disease, have also by this time passed almost en¬ 
tirely into the hands of municipalities. 

“For it was found by experience that, whether in 
constructing sewers, sweeping streets or removing 
house refuse, reliance on the profit-making contractor 
did not result in so efficient a service as the perform¬ 
ance of the work by the citizens' own staff." 1 

In the United Kingdom millions of dollars are now in¬ 
vested in public swimming pools. Turkish, electric, mud, 
mineral and hot baths are also conducted by several gov¬ 
ernments. And so huge has become the business of curing 
the sick that in a number of important governments “a ma¬ 
jority of all of the medical practitioners have been brought 
into governmental pay in one or another form." Nursing 
and pharmaceutical work is showing the same evolution. 
An increasing number of governments have likewise adopted 
extensive systems of health insurance. 

This tendency of providing for the health of the com¬ 
munity has been so marked, in fact, that the Fabians are 
led to the following rather startling conclusion: 

“We can hardly doubt that, perhaps within a genera¬ 
tion, the nurses, the chemists, and the doctors will be, 
with comparatively few exceptions, as plainly the offi¬ 
cers of the community, pursuing their profession, not as 
traders for profit, but with the status of public servants, 
as is already the case with their colleagues (possibly, in 
the aggregate of 100,000 in number) who are today 
salaried members of the various medical, pharamceuti- 
cal, nursing, educational, or scientific services of public 
institutions or Government departments." 2 
Nor does community care of the bodies of its citizens 


1 Ibid., p. 5 . 

2 Ibid., p. 6. 



PUBLIC OWNERSHIP 


23 


cease when death comes. Most of the governments of the 
world provide a public burial ground for their departed cit¬ 
izens. 

Private grounds, in fact, are almost unknown outside of 
the United Kingdom, the United States and Canada. The 
business of interring bodies in the grave has been practically 
a municipal monopoly in Paris since 1904, and in some of 
the Switzerland cantons this service is performed gratui¬ 
tously. 

Housing —Public housing activities may legitimately be 
classified under the general heading of those public func¬ 
tions that directly affect the well-being of the citizens of the 
community. For the character of the houses of the work¬ 
ers bears a very immediate relation to the health of the 
working class family. It goes without saying that the vast 
business of building and owning houses is, with compara¬ 
tively few exceptions, private. And yet, during the last 
generation, many municipalities and other communities have 
gone into this line of effort with rrtuch vigor. In 1912, Paris 
appropriated $40,000,000 for the construction of municipal 
houses. Liverpool, London and other English cities have 
erected great blocks of tenement houses. Liverpool espe¬ 
cially has purchased and torn down blocks of dilapidated 
tenements and erected substantial, sanitary municipal 
houses in their places. English cities are also developing well 
planned suburbs. 

The German and Italian municipalities have advanced, far 
in these activities. Many of the German cities own a very 
considerable per cent, of their land—Freiburg, a city of 87,- 
000 inhabitants,—possessing no less than of the land on 
which it stands—and this ownership has aided materially 
in its housing schemes. Frankfort-on-the-Main, which be¬ 
gan its building operations in 1897, now values its assets in 
real estate at about $75,000,000. Buenos Ayres, in the South 
American country of Argentine, in 1912, contracted for the 
building of no less than 10,000 houses. In Ireland the gov¬ 
ernment has constructed large numbers of houses for the 


24 


PUBLIC OWNERSHIP 


farm tenants. New Zealand also figures in this activity, 
as do Belgium and Scandinavia. Housing operations since 
the outbreak of the war have been extensive. 

Lighting .—The task of supplying light to the houses after 
they are erected—as well as to thoroughfares and business 
establishments—has been regarded, with every passing year, 
as a natural monopoly that should be public in its nature. 
And so we discover that at present perhaps 2,000 municipal¬ 
ities now own their own gas plants throughout the world. 
These are capitalized at from $500,000,000 to $1,000,000,- 
000. Germany possessed 709 of these plants in 1908, and 
England 300. The municipality, Widnes Town in England, 
a short time ago, claimed a rate of 16c. to 25c. per 1,000 
cubic feet. This rate, according to the town council, is 
lower than that of any other gas plant in the world. 

Electric lighting is showing the same tendency. No less 
than 250,000 employes, it is estimated, work in the various 
governmental lighting plants, which are valued at about 
$35500,000,000. 

Even in the United States^ve found in 1912 no less than 
1,562 municipal electric light plants, an increase of 91% 
over a decade before. These were, however, established, for 
the most part, in the smaller cities, most of the public plants 
being left to private enterprise. Cleveland is an exception 
to this, and, in a recent year its officials declared that the 
publicly owned plant had saved to the people of the city 
many hundreds of thousands of dollars. 


PART II 


WAR—COLLECTIVISM 

The foregoing is a brief summary of the advance toward 
public ownership prior to the war. The war has brought an 
almost revolutionary change in the industrial structure. 
The reason is not far to seek. Millions of workers have 
been called from their normal occupations and sent into the 
trenches. Mighty new industries connected with the game 
of war have sprung up on all sides. Whole armies have to 
be fed, clothed, and transported. Masses of material are 
daily being destroyed by submarine and machine guns. 
Those who remain at the business of producing and dis¬ 
tributing the necessities of life for the military and the civil¬ 
ian population must be utilized to the full. Useless effort 
must be eliminated. Theory had formerly taught that private 
competition was in the end the most efficient. Faced by the 
stern necessities of the war, common sense has pointed out 
that private competitive enterprise was wasteful, that it took 
advantage of the tragic needs of the people, that it could 
not be made "to co-operate for national ends. Individualism 
in industry broke down, and many who formerly scouted the 
idea of collectivism, almost instinctively advocated it as the 
only efficient and satisfactory method of mobilizing the in¬ 
dustrial resources. 


England 

Railroads —This collectivist advance was evidenced in 
practically every belligerent and many neutral countries. Its 
progress has been noteworthy in England, the classic land 
of laissez faire. On August 4, war was declared with Ger¬ 
many. I well remember hearing the newsies around Traf¬ 
algar Square in London in hoarse voice announcing this por¬ 
tentous event. On August 5, on arriving at the London 
Station to catch my train to Liverpool, I found that His 
Majesty’s Government had assumed control of all the rail- 


26 


PUBLIC OWNERSHIP 


roads in England, Scotland and Wales. The railroad ad¬ 
ministration had been placed in the hands of a committee 
of general railway managers, their chairman the President 
of the Board of Trade. From that time on, the British rail¬ 
roads—formerly deadly competitors—were run as a single 
system. Iii 1917, as a result of the orders of the govern¬ 
ment forbidding the cross-hauling of coal and other supplies, 
it was estimated that 700 million ton miles would be saved 
annually. And with these recent changes there is growing 
up in England an increasingly large body of opinion vig¬ 
orously opposed to any return to the old competitive re¬ 
gime, and in favor of public ownership as well as public 
control. 

Shipping —Extensive experimentation has as well been 
made in water transportation—in shipping. In dealing with 
public control in this industry, the Chancellor of the Ex¬ 
chequer stated in May, 1917, that of all ships of 1,600 tons 
and upwards, 90 per cent, had been requisitioned, or had 
been notified that they would be! 

Coal —Another fundamental industry which sooner .or 
later was bound to come under strict regulations was that 
of coal. At first this industry was given a fairly free hand, 
though subject to regulation. The continuance of high 
prices and, labor difficulties, however, necessitated radical ac¬ 
tion, and on December t, 1916, over two years after the out¬ 
break of the war, the government was forced to assume con¬ 
trol, though not ownership, of all the coal mines of South 
Wales and Monmouthshire. A committee, consisting 
of representatives of the Board of Trade, the Home Office 
and the Admiralty was appointed to administer the mines. 
Three months later, governmental control was extended to 
all coal mines in the United Kingdom for the duration - of 
the war, and a department was organized for their operation. 

Food —A further industry which was inevitably drawn 
into the vortex of collectivism was the huge business of food 
supplies. In October, 1914, the United Kingdom purchased 
no less than 900,000 tons of sugar, which it sold to re- 


PUBLIC OWNERSHIP 


27 


finers, at the same time fixing a maximum price to con¬ 
sumers. Durirfg the three years of the war, it secured con¬ 
trol successively of the wheat supplies from India, Australia 
and Canada, and, since 1915, has co-operated extensively 
with the French and Italian wheat commissions in the pur¬ 
chase of that necessity. Rice and corn were later 'similarly 
controlled. 

Undoubtedly the most important step toward the conser¬ 
vation of the food supply was taken more than two years 
after the beginning of the war, in November, 1918, when 
the Board of Trade was given power to requisition supplies, 
enter and cultivate lands, regulate the manufacture, sale 
and use of articles, and prevent their waste and destruction. 
The next development was the appointment of a food con¬ 
troller. In April, 1917, the controller was authorized by 
Parliament to obtain possession of any factory, workshop 
or premises engaged in the preparation of food. The same 
month announcement was made that all flour mills of any 
considerable size would be taken over by the government. 
The Minister of Munitions was also given entire control 
over all fats, oil and oilseed. 

Housing —The housing situation has recently become so 
acute that the government has also been compelled to be¬ 
come a house builder on a large scale. Immediately after 
the outbreak of the war (August 10, 1914), it appropriated 
nearly $10,000,000 for the construction of houses for gov¬ 
ernmental employes or workingmen on government con¬ 
tracts, and $20,000,000 for the building of houses in urban 
communities and the lending of money to other bodies for 
that purpose. While the government has kept most of its 
work in this direction a secret—as the building has been 
in the vicinities of armament plants—the secretary of the 
Garden City and Town Planning Association recently as- 
'Serted “that when the time comes for a record to be placed 
before the world of what has been done in this regard, it 
will be a revelation.” 

An illustration of its work may be seen at Well Hall, 


28 


PUBLIC OWNERSHIP 


near the Woolwich Arsenal, where it has built some 1600 
houses of a permanent type, and has erected stores, halls* 
schools and other public buildings, as well as central kitch¬ 
ens, laundries and churches. 

In an act passed nearly a year after the beginning o£ 
the war, the authorities were also empowered to take pos¬ 
session of any unoccupied land for the purpose of housing 
workmen employed in certain government work. An in¬ 
teresting feature of this act was a clause forbidding the 
government in the purchase of land from paying unearned 
increments or decrements created since the beginning of 
the war by any party not interested in the land. Laws re¬ 
stricting the raising of rent have likewise been passed. 

Other Industries —England has, as well, since the begin¬ 
ning of the war, appropriated $50,000,000 for the establish¬ 
ment of a dye research laboratory; has established a new 
governmental department for the encouragement of scien-? 
tific and industrial research, and has gone extensively into 
state insurance, assuming all risks at a flat rate of insurance. 
In the wool, hide, leather and other industries, public control 
and management have also been extensively developed. 

Significance of the Trend —In speaking of the effect of the 
war on collectivism, the economist John A. Hobson observes 
that “the war will have advanced state Socialism by half a 
century.” 1 while Professor Howard L. Gray of Bryn Mawr 
declares that “the doctrine of laissez faire, still respected in 
1914, had by the end of 1917 passed into at least temporary 
oblivion.” 2 Finally regarding this trend, H. G. Wells utop- 
ianizes : 

“I believe that out of the ruins of the nineteenth 
century system of private capitalism that this war has 
smashed forever, there will arise, there does even now 
arise, in this strange scaffolding of national munition 
factories and hastily nationalized public' services, the 
framework of a new economic and social order, based 
upon national ownership and national service. 

1 Hobson, Democracy after the War, p. 166. 

2 Gtay, War Time Control of Industry, p. vii. 



PUBLIC OWNERSHIP 


29 


“By 1926/’ he continues, “we shall be going about 
a world that will have recovered very largely from the 
impoverishment of the struggle; we shall tour in state 
manufactured automobiles upon excellent roads and 
we shall live in houses equipped with a national factory 
electric light installation, and at every turn we shall be 
using and consuming the products of nationalized in¬ 
dustry and-paying off the national debt at the same 
time, and reducing our burden of rentiers.” 1 

Germany. 

As was .to be expected, war-collectivism has been as well 
ardently advocated in Germany, which, prior to the war, 
had advanced further along the path of collective endeavor 
than any other country outside of Australia. It is undoubt¬ 
edly this collectivism which has done more than any other 
one factor to keep the economic life of Germany intact 
under the tremendous strain of the last few years. 

Food —In an attempt to grapple with the food situation, 
thirty or forty government corporations have been organized, 
possessing capital stock derived from the state and holding 
the right of monopoly over the particular commodities with 
which they deal. The food controller has been empowered 
to confiscate the products of the soil, plant and animal. All 
middlemen between wholesaler and consumer have been 
eliminated, dealers in foodstuffs are required to secure li¬ 
censes before they are allowed to do business, and no more 
wholesalers or retailers are licensed than the business seems 
to demand. Increase of price by indirection has been made 
a penal offense. Food advertisements have been closely 
restricted. Since the latter part of 1916, communal au¬ 
thorities have seized and apportioned between the locality 
and the imperial bureau all butter produced in the larger 
dairies, while all live stock is now confiscated and its de¬ 
livery to the market controlled. 

In 1915, Germany also established a monopoly of all ni- 


1 Wells, What is Coming, pp. 121-3. 



30 


PUBLIC OWNERSHIP 


trogenous material for a period of seven years. “This is 
probably the first instance in history,” writes the chronicler, 
“of a government using the atmosphere as a source of 
money.” 


Italy and France 

The activities of the Italian cities since the beginning of 
the war have been noteworthy. Rome has established no 
less than 160 municipal bakeries for the selling of bread, 
besides many meat markets and stores for the distribution of 
potatoes, macaroni, noodles, rice and beans. It has sold, 
at low prices, as many as 80,000 eggs a day, and is daily im¬ 
porting, pasteurizing and selling over 12,000 quarts of milk. 
This control has helped materially to keep prices down, the 
advance in price being, until a few months ago, but 18%, 
a lower increase than that evidenced in any other city of 
Italy. In its control of meat, fish, flour and bread, Milan 
saved to the citizens from the beginning of the war, until 
May, 1916, about $375,000. Genoa has followed suit in 
numerous activities. The municipalities have here generally 
worked hand in hand with the cooperative stores. 

Unique among the ventures of the federal government of 
Italy has been the shoe industry. In tackling the agricul¬ 
tural situation Italy has required farmers, for a reasonable 
compensation, to lend their labor force and machinery to 
neighbors in need. The Minister of the Interior has here 
the power of food controller. Grains are bought and sold 
without a profit by community associations, of which the 
municipalities are prominent members. 

France has adopted regulations somewhat similar to Eng¬ 
land, although its control has been less thorough and sys¬ 
tematic. It has devoted much attention to agriculture, and 
has pooled small agricultural holdings, and loaned con¬ 
siderable sums of money to farmers in invaded territories 
for the purchase of farm equipment. In other respects, its 
activities have been largely regulatory. It has done much 
more than England, Germany, and other countries to en- 


PUBLIC OWNERSHIP 


3 i 


courage the voluntary co-operative movement to try its hand 
in the solution of the problem of food and other supplies. 

Russia 

Concerning collectivism in Russia since the revolution, 
we are informed that: “Thus far the working class govern¬ 
ment of Russia has appropriated the banks and the banking 
system of the country; has taken possession of the entire 
mining district; has declared the munitions factories state 
property without compensation; has supported the control 
of other factories, and their profits, by workingmen’s com¬ 
mittees; . . . and has decreed the land of Russia to the 
people who work upon it and the land is now actually held 
in common by those peoples.” 1 

The United States 

Since April, 1917, national control in this country has 
proceeded most rapidly in the railroad, shipping, fuel and 
food industries. 

Railroads —Of the most far reaching importance was the 
assumption by the government, in December, 1917, of the 
great railroad system with its 260,000 miles of railway, its 
1,000,600 men and its estimated investment of $17,500,- 
000,000. 

For several months after the outbreak of the war, the 
railroads were under the control of a Railroad War Board, 
composed of a number of the most prominent railroad men 
of the country. The government at first seemed desirous 
of giving private operation a chance to show its ability to 
co-operate. Secretary Lane, in the Spring of 1917, con¬ 
ferred with the presidents of 120 roads and told them “man- 
to-man, that the situation called for operation of the rail¬ 
roads of the country as one system; that there was going to 
be a test of their imagination, their capacity, their ability, 
their statesmanship.” 


1 The Liberator, March, 1918. 



32 


PUBLIC OWNERSHIP 


This failure to respond to the needs of the community, 
led, nearly nine months after war broke out, to presidential 
proclamation, ordering public control of this greatest of the 
world’s railroad systems. “It has become unmistakably 
plain,” declared the President, “that only under government 
administration can the entire equipment of the several sys¬ 
tems of transportation be fully and unreservedly thrown 
into a common service without injurious discrimination 
against particular properties. Only under government ad¬ 
ministration can an absolutely unrestricted and unembar¬ 
rassed common use be made of all tracks, terminals, termi¬ 
nal facilities, and equipment of every kind. Only under 
that authority can new terminals be constructed and de¬ 
veloped without regard to the requirements or limitations of 
particular roads.” 1 

Public control of the railway properties was assumed by 
the government on December 28, two days after President 
Wilson's order, and William G. McAdoo, Secretary of the 
Treasury, was made Director General. The ownership re¬ 
mained as before, and guarantee was made for the mainte¬ 
nance of the equipment of the roads during the period of 
federal control, and for the payment of net operating in¬ 
come equivalent to the average net income of the three 
years preceding June 30, 1917. In order to secure still 
greater co-ordination in the conduct of the roads, Director 
General McAdoo issued a sweeping order, on May 21, 1918, 
for the removal of all railroad presidents as operating heads 
of the lines, and for the naming of experts to take their 
place, to be known as Federal Managers, and to receive 
salaries of from $5,000 to $20,000 a year. These Mana¬ 
gers were made directly responsible to the Regional Directors 
and they to the Director General. Under the former sys¬ 
tem of appointment, it was held, the railroad presidents 
were too prone to consider their obligations to their particu¬ 
lar roads more highly 'than their duties to the nation as a 
whole. 

On July 1. 1918, some 1,700 short lines of railroads. 


1 See N. Y. Times, January 5, 1918. 



PUBLIC OWNERSHIP 


33 


mostly industrial or plant facility lines, and repre¬ 
senting about 30,000 miles of track were returned to pri¬ 
vate owners. Between 300 and 400 of the roads relinquished 
had sought to remain under Government management, but, 
as the Railroad Administration had been required by law 
to decide which roads to return by July 1, the requests of 
the smaller lines were of no avail. A few hours following 
the relinquishment of the roads, Congress passed an act 
extending the time for decision. The chief reason for the 
action of the Railroad Administration seemed to be the fear 
of financial loss. Some of the roads returned may, within 
a short time, return again to public control. 

The Express Business —Closely allied with the railroads 
are the express companies. At first these were little affected 
by federal control. On May 29, 1918, however, the Di¬ 
rector General of Railroads approved a plan whereby the 
four great express companies—the Adams, American, Wells 
Fargo, and Southern—united in a single corporation, with 
a capital of $30,000,000, the extent of the actual property 
and cash included in the company. The service to be ren¬ 
dered by this corporation and the rates to be charged were 
to be under the control of Director McAdoo and subject to 
his initiation, while the government was to share on a pro- 
gressingly increasing scale in any profits derived from the 
business. Predictions are that the elimination of competi¬ 
tive wastes—separate officers, equipment, etc.—will lead to 
a saving of millions of dollars annually in the operation of 
this unified service. 

Shipping —While the United States failed to take any 
drastic steps toward the federal control of railroads and ex¬ 
press until many months following the outbreak of the war, 
it was but a few days after the declaration of April 6, that it 
entered vigorously into the business of shipping. Its first 
action was the taking over of 91 German ships valued at 
$125,000,000 to be used in the transportation of troops. On 
August 4, the Emergency Fleet Corporation, a purely federal 
concern, requisitioned all of the steel ships of more than 
2500 tons then in the course of construction in the great 


34 


PUBLIC OWNERSHIP 


shipyards of the country. By March I, 191S, less than a 
year after the United States had entered the war, this corpor¬ 
ation had requisitioned 425, steel vessels and contracted for 
720, an aggregate tonnage of 8,164,50s tons; had let con¬ 
tracts for 490 wooden vessels, aggregating 1,715,000 tons 
and had repaired and put into operation ships totalling 788,- 
000 tonnage seized from Germany and Austria. The First 
Annual Report of the Corporation, in estimating the ex¬ 
tent of the work of the year, significantly remarks: 

“The Corporation is now engaged in what is prob¬ 
ably the greatest construction task ever attempted by 
a single institution. . . . It is controlling substantially 
all the shipbuilding of the country other than of naval 
vessels, and its program calls .for the completion in 
1918 of eigHt times the tonnage delivered in 1916.” 1 

After the war is over the title to vessels owned by for- 
eigner^ will be retained by the government, although Ameri¬ 
can owners will be permitted, under certain conditions, to 
regain title. The Shipping Board is, as well, conducting a 
far-reaching scheme of industrial education. 

Foo' 4 — More spectacular in its nature—though, as yet. far 
from satisfactory from the standpoint of the radical or of 
the millions hard pressed by high prices—has been the gov¬ 
ernmental control of food. The United States definitely 
entered the ranks of food controllers on August 10, when 
the president signed the Food Administration Act. 

Like food acts in all q^f the countries, this law sought to 
stimulate production, to reduce the wastes of distribution, 
to eliminate “unreasonable” profits and to direct a wise 
consumption. 

It gave the president power to purchase, store and sell 
wheat, flour, meal; beans and potatoes; to regulate the price 
of coal and coke, as -well as the method of production, dis¬ 
tribution, and storage; and, if this business should be run 
inefficiently or in a manner prejudicial to the public interest, 

1 First Annual Report of the Shipping Board, House Document No. 394, p. 3. 



PUBLIC OWNERSHIP 


35 

to take over the plants for operation during the period of 
the war. 

Even more drastic were the powers secured by the presi¬ 
dent over commodities necessary for the common defense. 
Food, feed and fuel used in such defense could be requisi¬ 
tioned and proper governmental storage facilities could be 
provided for them. Factories, packing houses, oil pipe 
lines, mines and other plants could as well be taken over 
and operated by the government. 

Distilled spirits were prohibited by the act. In conse¬ 
quence, the manufacture of whiskey from grain ceased on 
.September 7. Power was likewise given the president to 
regulate or prohibit the production of malt or vinous liquors, 
to license those dealing in certain necessities and to prevent 
destruction, waste, and monopolizing of commodities. 

After the passage of the bill, Herbert C. Hoover was ap¬ 
pointed Food Administrator. On August 15, 1917, a $50,- 
000,000 wheat corporation was formed, with all of the 
stocks held by the Federal Government, for the purpose of 
buying and selling wheat at the principal terminals, handling 
all Allied grain business and conducting the buying for the 
American government. All futures in wheat were pro¬ 
hibited, and, on August 25, ‘‘the Chicago wheat pit, once 
noted for its turbulence, became as quiet as a country 
churchyard.” Dr. Harry A. Garfield was appointed chair¬ 
man of the price-fixing committee, which, on August 30, 
fixed the price of wheat for the United States and her Allies 
at $2.20. 

The most forward looking step toward buying on an in¬ 
ternational scale was taken on August 24, when the govern¬ 
ments of the United States, Great Britain, France and 
Russia reached an agreement whereby all purchases in this 
country for these allied governments would be made by an 
American Commission, the Purchasing Committee for the 
War Industries Board. In explaining the disastrous competi¬ 
tion formerly prevailing, a press report states: “In some cases 
it was found that agents of the allied countries had combed 


3$ 


PUBLIC OWNERSHIP 


the Western markets for grain months in advance of any 
efforts of American buyers, and had large quantities of ma¬ 
terials stored awaiting favorable conditions of shipment, 
while prices went upward in consequence of the steadily 
increasing scarcity of certain staples.” The social implica¬ 
tions of such international industrial co-operation may be 
most significant when peace has been restored. Significant 
also in this connection is the international sugar commission 
formed for the purpose of arranging for the distribution 
of sugar imported from the West Indies and the United 
States’ insular possessions. 

The power of license under the Food Control Act was 
exercised on October io, when the president placed under 
the license system all dealers in meat, cereal, vegetable, and 
dairy products doing an annual business of more than $100,- 
ooo. This order became effective November I. All licensed 
dealers are henceforth expected to limit their.prices to a rea¬ 
sonable amount over expenses and to forbid the acquisition 
of speculative profits from a rising market; to keep all food 
commodities moving to the consumer in as direct a line and 
with as little delay as practicable; and to limit, as far as<' 
practicable, contracts for future delivery. 

Fn-el —A further industry subjected to national control—- 
chiefly, however, as related to price and shipment,—is that 
of fuel. The government obtained considerable control 
over coal and coke with the passage of the Food Control Act. 

On August 20, Robert S. Lovett, designated the Federal 
Agent under the Priority Shipments Act, directed forty-six 
railroads to “give coal shipments from the mines of the 
Northwest precedence over other business. On the fol¬ 
lowing day, the president issued a sweeping order fixing the 
base price of bituminous coal in all of the big producing 
districts. On August 23, Dr. Harry A. Garfield was named 
Coal Administrator. Dr. Garfield fixed a stated price for 
anthracite at the mines and announced that jobbers handling 
coal could not charge a commission of more than from 15c 
to 30c a ton. 


PUBLIC OWNERSHIP 


37 


Of special significance also was the order of the Fuel 
Administration which took effect on April i, 1918, prohibit¬ 
ing mine owners from shipping their coal outside of certain 
prescribed limits. Under the plan, for instance, industries 
in the central states are not allowed to obtain their coal 
from the West Virginia fields, but must draw it from the 
producing centers nearest them. This, as in England, will, 
it is estimated, by eliminating the long hauls, save the 
freight cars millions of miles of unnecessary travel. How 
far the control of coal will go is problematical. Dr. Garfield, 
in December, 1917, expressed his belief that the taking over 
of the coal supply by the government was inevitable. 

Telegraphs and Telephones —The last of the great services 
to be taken over by the government (up to the summer of 
1918) were the telephone and telegraph lines. On July 16, 
1918, partly as a result of a threatened strike of telegraph 
operators, Congress passed a resolution giving to the Presi¬ 
dent power to assume control of telephones, telegraphs, cable 
and radio services. Following this action, President Wilson, 
on July 23, issued an order declaring that the government 
‘‘do hereby take possession and assume control and super¬ 
vision of each and every telegraph and telephone system, 
and every part thereof, within the jurisdiction of the United 
States, ^including all equipment thereof and appurtenances 
thereto, whatsoever, and all materials and supplies.” t>r . 

Postmaster General Albert S. Burleson was placed in 
charge of these utilities, and in turn designated John C. 
Koons, First Assistant Postmaster General; Davil J. Lewis, 
U. S. Tariff Commissioner, and William H. Lamar, solicitor 
for the Post Office Department, a committee on manage¬ 
ment. The presidential order declared that obligations al¬ 
ready accruing be regularly paid, and that dividends and in¬ 
terest be continued until the Postmaster General otherwise 
directs. Mr. Burleson was given the power to return cer¬ 
tain lines to private control at his discretion. The change in 
control was effected on July 31. The radio service is now 
under the control of the Navy Department. 

Other Industries -*A very definite departure in the direc- 


PUBLIC OWNERSHIP 


38 

tion of social control was also made early in the war by the 
passage in the Senate (May 22, 1917), of its $50,000,000 
war risk insurance bill. 

And then, of course, if one wished to cite them, there 
are the enormous industrial operations recently developed 
in connection with the army and navy departments, which 
involve the manufacture of thousands of commodities, the 
purchase of millions of dollars worth of goods, the erection 
of great warehouses and plants and the develpment of ex¬ 
pensive and intricate laboratories. Recent purchases of the 
quartermaster's department, for instance, included 40,000,000 
pounds of dried beans, 91,000,000 cans of baked beans, over 
65,000,000 cans of tomatoes, 91,000,000 of condensed milk, 
and large quantities of other food stuffs. One hundred and 
eighty acres of land have just been acquired for one projec¬ 
tile plant. Plans have recently been made for a warehouse 
in Brooklyn, which is estimated as the greatest structure of 
its kind in the world. However, as no effort has been made 
in this inquiry to describe even the industrial features of 
the army and navy, this interesting line of investigation 
must for the present be passed over. 

At present writing the lack of coordination between the 
many scores of governmental bodies; the prices paid by the 
government for some of its supplies; the insufficient techni¬ 
cal experience of certain controllers of governmental enter¬ 
prises ; the failure to reach effectively numbers of profiteers 
and to eliminate some of the worst wastes of distribution; 
and the neglect of the government to provide for adequate 
representation for the workers in public employ, have pre¬ 
vented American war collectivism from fulfilling its possi¬ 
bilities. Nevertheless, that collectivism has undoubtedly 
saved the nation millions that would otherwise have been 
exacted by unregulated capitalism, and has made a start 
toward a reduction in competitive wastes. Extensive plans 
for improvement in certain of these regards are also 
promised for the near future. 

As in England, Germany, Italy, France, Russia and the 
United States, so in practically other belligerent and many 


PUBLIC OWNERSHIP 


39 


neutral countries, governmental operation of important in¬ 
fer improvement in certain of these regards are also 
in scope and importance. 

PART III. 

RESULTS OF PUBLIC OWNERSHIP. 

Collectivism After the War 

It is well-nigh universally admitted that the public Owner¬ 
ship that developed prior to the war has, for the most part, 
come to stay. As the Fabian Research Department brings 
out, “there is today only a single instance throughout the 
world—that of Guatemala—in which a railway, once gov¬ 
ernmental, is now in private hands.” 1 And that which is 
true of the trend in railways, is, to a very considerable ex¬ 
tent, true in most other lines of collectivist endeavor de¬ 
veloped prior to the war. But what of the war collectivism 
undertaken for this particular. emergency ? Will not this 
be exchanged for private enterprise as soon as peace is re¬ 
stored ? 

Many powerful forces will undoubtedly urge such a re¬ 
turn. In numerous instances they will succeed. On the 
other hand, the war will have given rise to other powerful 
economic and political. forces which will throw' their in¬ 
fluence on the side of the* retention and extension of such 
collectivism, and, as well, its democratic control. 

(i) In the first place, it is a difficult task, after control 
has become unified, after competitive wastes have been elimi¬ 
nated, to return to the competitive regime. The late J. 
Pierpont Morgan succinctly expressed a profound truth, 
when, in referring to the trust, he declared: “It is hard to 
unscramble scrambled eggs.” The return, for instance, of 
the control now centralized in the hands of the U. S. gov¬ 
ernment to the scores of railroads operating as separate 
units prior to the war may well prove to be an impossible 
task. 

1 Fabian Research Department* .,Qp. Cit., p. 5. 



40 


PUBLIC OWNERSHIP 


(2) The desire to secure revenue to pay for the public 
debt will undoubtedly lead many a public financier in the 
warring nations to follow the advice of Sidney Webb 1 and 
urge the retention and extension of public enterprise in 
order to obtain the enormous revenue required. 

(3) Many business men will demand public control in 
order to make the nation more efficient in its competition 
against other nations. 

(4) The lessons taught during the war of the advantages 
of public administration and of the crying evils which are 
bound to flow from private control of life’s necessities, will 
undoubtedly give an impetus to further control. 

( 5) The necessity of solving the unemployment problem 
inevitable after the war will as well give an added impetus 
to additional public operation. Millions of workers in every 
country, following the declaration of peace, will be returning 
from the trenches, from the ammunition and other war in¬ 
dustries and will be demanding work. Some of them will 
find that their places have been taken by machines, some by 
an entire revolutionizing of industry, others by woman labor. 
Private capital will not be as plentiful in many of the war¬ 
ring countries as it was before the war, and will not be in 
so strategic a position to undertake new ventures. Resort 
must inevitably be made to the extension of public under¬ 
takings if the unemployment problem is to be met. 

(6) Many thousands of workers, furthermore, after the 
war is over, will probably be bolder in their demands for 
social reconstruction than before the conflict. They will 
have risked their lives in order “to make the world safe 
for democracy,” and on returning will not be satisfied with 
anything less than equality of opportunity, industrial as well 
as political. They will, as President Wilson declared in his 
message to the New Jersey Democrats, be impatient of 
“mere phrases” and will demand “sincere action” and “real 
thinking.” And the result of all this will probably be a 


1 Webb, How to Pay for the War. 


PUBLIC OWNERSHIP 


4i 


greater insistence on the control by the people of their own 
industrial life. 

And much of this yearning “for the birth of a new day,” 
“a day of greater opportunity and greater prosperity for 
the average mass of struggling men and women,” will un¬ 
doubtedly express itself to a very considerable extent 
through ever more powerful and ever more purposeful labor 
and Socialist organizations formed on the economic and po¬ 
litical fields. The truth of this seems-at least to be indicated 
by the recent remarkable development of the British Labor 
Party. 

Prior to the war this Party consisted of three groups—• 
the great trade union group, the Independent Labor Party— 
the Socialist branch of the Labor Party—and the small 
though influential Fabian Society of which Sidney and 
Beatrice Webb and,Bernard Shaw were the moving spirits. 
It was represented in Parliament by some 40 members. The 
I. L. P. and the Fabian Society had Socialist bases, but 
the inclusive British Labor Party had no constructive pro¬ 
gram. The Party, however, has been profoundly affected by 
the war. It has greatly increased in membership through 
the recent addition to its ranks of the powerful co-operative 
movement and of the brain workers. It has also drifted far 
away from its old moorings of mere social reform and is 
now advocating a thoroughgoing program of public owner¬ 
ship and democratic control. “We need to beware of patch- 
work,” it declares in the proposed program of social recon¬ 
struction. “The view of the Labor Party is that what has 
to be reconstructed after the war is not this or that Govern¬ 
ment Department, or this or that piece of social machinery; 
but, so far as Britain is concerned, society itself.” 

And among its immediate planks of social reconstruction, 
it demands the common ownership of the nation’s land, the 
nationalization of railways, mines, electrical power, steam¬ 
ers, insurance and other industries. And the program which 
is being considered by this Party of the workers is meeting 
with ever greater response among the common people all 
over the world. 


42 


PUBLIC OWNERSHIP 


Without taking into consideration the remarkable collec¬ 
tivist sweep brought about by the war, the Fabian Researc 1 
Department, in endeavoring to prophesy the probable de¬ 
velopment of public ownership and control within the next 
generation or two, significantly stated “that even if no more 
were accomplished within the next thirty years than m 
bringing under public administration, in all the countries o 
the civilized world, those industries and services which are 
today already governmentally administered in one or other 
of the countries, the aggregate volume of state and munici¬ 
pal capital and employment would be increased probably 
five or six fold. Such an increase, without adding a single 
fresh industry or service to those already successfully na¬ 
tionalized or municipalized in one country or another, 
would probably bring into the direct employment of the na- 
► tional or local government an actual majority of the adult 
population ; and along with the parallel expansion of the co¬ 
operative or voluntary associations of consumers in their 
own sphere would mean that probably three-fourths of all 
the world’s industrial capital would be under collective or 
non-capitalistic administration, whilst three-fourths of all 
the households might be enjoying the permanence, the so¬ 
cial dignity, the security and the incomes deliberately ad¬ 
justed to the cost of living that mark the best examples 
of state employment.” 1 

With the still greater development of public control which 
war has brought about, who can doubt that we are seeing 
before our very eyes the “collectivist state in the making . 

The Lessons of Collectivism 

We have observed the tendency toward governmental 
ownership both prior to and after the outbreak of the war, 
and have endeavored to estimate its future progress. Pub¬ 
lic ownership has thus far led to the elimination of enormous 
wastes due to individualistic competition. It has made pos¬ 
sible in many instances a deliberate determination by the 


1 Fabian Research Department, Op. Cit p. 32. 



